Year-End Tax Planning For Your Investments

Year-End Tax Planning For Your Investments

While tax consequences should never drive investment decisions, it’s critical that they be considered — especially this year: Higher-income taxpayers may face more taxes on their investment income in the form of the returning 39.6% top short-term capital gains rate and 20% top long-term capital gains rate and a new 3.8% net investment income tax (NIIT).

Holding on to an investment until you’ve owned it more than one year so the gains qualify for long-term treatment may help substantially cut tax on any gain. Here are some other tax-saving strategies:

Use unrealized losses to absorb gains

Avoid wash sales

See if a loved one qualifies for the 0% rate

Many of the strategies that can help you save or defer income tax on your investments can also help you avoid or defer NIIT liability. And because the threshold for the NIIT is based on modified adjusted gross income (MAGI), strategies that reduce your MAGI — such as making retirement plan contributions — can also help you avoid or reduce NIIT liability.

Searching for an audit, tax and accounting partner that can provide freedom from financial anxiety? Gilbert has it all… pinpoint expertise, experience-driven insights, lightning-fast responsiveness and personalized communications. Our solutions turn knowledge into power. And we’ve been doing it for over 30 years, helping individuals and organizations throughout Northern California succeed. When it comes to the personal attention and service we offer, nobody does it better. You don’t have to worry. Relax. We got this!

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